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The optimal short-term management of flexible nuclear plants in a competitive electricity market as a case of competition with reservoir

Author

Listed:
  • Maria Lykidi

    () (ADIS - Analyse des Dynamiques Industrielles et Sociales - UP11 - Université Paris-Sud - Paris 11 - Département d'Economie)

  • Jean-Michel Glachant

    () (ADIS - Analyse des Dynamiques Industrielles et Sociales - UP11 - Université Paris-Sud - Paris 11 - Département d'Economie, EUI - European University Institute - Robert Schuman Center)

  • Pascal Gourdel

    () (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)

Abstract

In many countries, the electricity systems are quitting the vertically integrated monopoly organization for an operation framed by competitive markets. It therefore questions how nuclear plants should be operated in an open market framework. We address the medium-term horizon of management to take into account the fluctuations of demand according to the seasons of year. A flexible nuclear set (like the French) could be operated to follow a part of the demand variations. Since nuclear plants have to stop periodically to reload their fuel (every 12 or 18 months), we can analyze the nuclear fuel as a stock behaving like a reservoir. The flexible operation of the reservoir permits to get different nuclear fuel allocations according to the different levels of the seasonal demand. We then analyze it within a general deterministic dynamic framework with two types of generation : nuclear and thermal non-nuclear. We study the optimal management of the production in a perfectly competitive market. In this paper, we focus on the optimal short-term (monthly) production behaviour before moving to a yearly or multi-annual optimization. This constitutes a prudent research strategy of a flexible nuclear set leaving the monopoly organization and exploring how to reach a market equilibrium in a competitive market. Then, we set up a simple numerical model (based on data from the French market) given that the nuclear production set is managed in a flexible manner in order to follow the variations in demand (like the French nuclear set actually does). The marginal cost of nuclear production being (significantly) lower than the one of non-nuclear induces a discontinuity of producer's short-term profit. The problem of discontinuity makes the resolution of the optimal short-term production problem extremely complicated and even leads to a lack of solutions. That is why it is necessary to study an approximate problem (continuous problem) that constitutes a "regularization" of our economical problem (discontinuous problem). The simulations show why future demand has to be anticipated to manage the current use of the nuclear fuel reservoir. Moreover, to ensure the equilibrium between supply and demand, the management of the nuclear set has to take into account the thermal non-nuclear generation capacity.

Suggested Citation

  • Maria Lykidi & Jean-Michel Glachant & Pascal Gourdel, 2012. "The optimal short-term management of flexible nuclear plants in a competitive electricity market as a case of competition with reservoir," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00747386, HAL.
  • Handle: RePEc:hal:cesptp:halshs-00747386
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00747386
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    Cited by:

    1. Pascal Gourdel & Maria Lykidi, 2014. "How to manage a large and flexible nuclear set in a deregulated electricity market from the point of view of social welfare?," Documents de travail du Centre d'Economie de la Sorbonne 14059, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    2. Pascal Gourdel & Maria Lykidi, 2014. "The inter-temporal optimization of the operation of the nuclear fuel reservoir in a liberalized electricity market dominated by the nuclear generation," Documents de travail du Centre d'Economie de la Sorbonne 14058, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    3. Pascal Gourdel & Maria Lykidi, 2014. "The optimal short-term management of flexible nuclear plants in a competitive electricity system as a case of competition with reservoir," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01053474, HAL.
    4. Pascal Gourdel & Maria Lykidi, 2014. "How to manage a large and flexible nuclear set in a deregulated electricity market from the point of view of social welfare?," Documents de travail du Centre d'Economie de la Sorbonne 14059, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.

    More about this item

    Keywords

    price discontinuity; Electricity market; nuclear generation; competition with reservoir; short-term optimal reservoir operation; electricity fuel mix; price discontinuity.; Electricité; production nucléaire; concurrence avec réservoir; gestion optimale des réservoirs à court-terme; discontinuité des prix.;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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